Crime Hurts Retailers During the Holidays

Crime is taking a bite out of retailers' fairly decent sales numbers for the holiday season so far, according to trade group the National Retail Federation. According to estimates from the group, around 40 percent of theft is caused by organized crime rings, "returns" fraud, and shoplifting. Crime has costs U.S. retailers tens of billions of dollars already according to the group.

"This year, the indicators we have seen year-to-date all show that retail crime has been on the rise. Organized retail crime, which is professional shoplifting and return fraud, where people return things back to the store, is up," said Joseph LaRocca, the NRF's Vice President Of Loss Prevention. "The shoplifting activity is consistent with last year so the number is very high."

According to data from the group collected every year, retailers lost $35.3 billion in 2010 and $33.5 billion in 2009. Shoplifting accounted for the lion's share of "lost merchandise," while organized crime, return fraud, inventory mistakes and labeling errors accounted for the rest. 

Retailers are trying to use new technology to thwart much of the illegal activity this year including hiring specialized loss prevention personnel and by using digital cameras to track those who try to steal. These high-tech cameras are in more stores than ever this year mainly because they have become less expensive. While the cameras seem to help, they won't stop everyone and some thieves are downright clever – finding blind spots and using other tactics to thwart security..

"We have seen shoplifting gangs continue to evolve in terms of their skill and technology. Over the years, we have seen an increase in organized crime activity," said LaRocca. "In 2010, 89% of retailers polled were victims of organized shopping crime. In 2011, it was 94.5%. So, we have seen organized retail crime on the rise and the skill of these groups and the types of tools they use continue to advance."

Many retailers also now have a special database to catch people who return items they never purchased in the first place. The stores are doing this by keeping track of who returns the most items in order to figure out who may be playing the system.

But the most effective way to prevent losses from theft is the employees, according to LaRocca. He says that a vigilant worker is the best defense in thwarting crimes before they ever happen.

Source: CNBC

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